Outcome of a court ruling could determine whether the Obama administration’s plan to curb power plant emissions by 32% by 2030 will become a reality. Republican-led states and the coal lobby filed various lawsuits – a key decision will be made by the US Court of Appeals for the District of Columbia on Tuesday.
The Clean Power Plan, put forward by the Environmental Protection Agency (EPA), mandates lower caps on carbon emissions, mercury and other pollutants from power plants. Critics claimed this would amount to a “war on coal power” but, in fact, retrofits could keep coal-fired power plants within the emission limits. Cost considerations, however, might make utilities abandon such retrofits in favour of shutting down their emission-intensive power plants.
Success of the Clean Power Plan would add to President Obama’s legacy and in the face of adamant opposition from Republican-led states in the Senate, he was using federal administration to drive through his climate agenda.
Mercury rule upheld by Supreme Court
The Supreme Court in June upheld EPA’s mercury rule, rebuking state-led legal challenges against the agency’s more stringent environmental targets. Consequently, all power plants in Texas as well as in other complainant states will ultimately have to meet the more stringent pollution standards.
Though the EPA's emission rules do not specifically require a shift from coal to gas generation, some states said this is effectively the only way-out to meet the agency's interim carbon reduction targets. The rule outlines a limit for coal-fired plants with attached carbon capture and storage (CCS) of 1,100 lb CO2/MWh. In contrast, gas combined-cycle plants will have an emission limit of 1,000 lb CO2/MWh for larger units and 1,100 lb CO2/MWh for smaller units.
As for timeline, the EPA has called for states to begin submitting implementation plans as early as June 30, 2016 and regional implementation plans by June 30, 2018.
Though 27 US states have challenged more stringent emissions targets set out by the Clean Power Plan (CPP), claimants such as the states of Arkansas, North Carolina, Oklahoma and South Dakota are already well on track to meet early targets, EPA head Gina McCarty said last week. In her view, federal policies that incentivise clean generation are pushing most of the rest toward timely compliance.
CPP fast-tracks shift from coal to gas
Should the Clean Power Plan be fully implemented, it would lower share of coal-burn for power generation to 21% by 2030 and 18% by 2040, according to EIA projections. Gas power generation would rise by more than 67% from 2021 to 2040 to become "by far the largest generation source," the EIA said in its 2016 Annual Energy Outlook. By comparison, coal's share of total electricity generation, which peaked at 50% in 2005, was 33% last year.
Supported by clean energy regulation, natural gas and renewables are estimated to surpass the market share of coal generation by the mid-to-late 2020s.
Coal retirements of 40-45 GW are anticipated by EIA analysts in 2016, driven by the Mercury and Air Toxic Standards regulations. An additional 55 GW of coal-fired capacity would be phased out under the Clean Power Plan, while merely 21 GW would be shut down if the CPP were not implemented which would leave coal ahead of renewables in the energy mix through 2040.